Africa’s economy: Bulging in the middle, (A boom in sub-Saharan Africa is attracting business talent from the rich world). The Economist/Print version, 20 October 2012 [reposted 26 October 2012]

26Oct

AFTER giving a speech at a business conference in London a young analyst chatted with investment executives in the audience, then followed two of them to a nearby hotel lobby. Over glasses of Chablis the executives raved about their company’s worldwide network of extravagantly decorated offices and their fat annual bonuses. Then they offered the analyst a job. What surprised him was not their interest, nor the chunky salary, but the place where they wanted him to help invest their millions: west Africa, the most backward part of a poor continent.

In recent years investors have been piling into Lagos and Nairobi as if they were Frankfurt and Tokyo of old. Anaemic growth in the rich world has made sub-Saharan Africa an attractive destination for money and its managers. Foreign direct investment has increased by about 50% since 2005. Once regarded as casinos, local capital markets now seem less risky. J.P. Morgan has just added Nigeria to its government-bond index for emerging markets; South Africa had hitherto been the only African country on its list. The American bank, the world’s biggest underwriter of emerging-market debt, predicts that adding Nigerian bonds to its benchmark will lure an extra $1.5 billion to the country. New funds will pay for so far non-existent infrastructure on a continent with a land mass equivalent to that of China, India, Japan, America, Mexico and Europe combined.

Some business people remain sceptical about Africa’s long-term prospects. Sales blather in Western financial circles hailing an African “golden age” is overblown. Most Africans are still poor, even if local managers drive flashy cars. A gaggle of truly wretched states is still trapped in misery and is unlikely to attain even modest prosperity soon. A recent survey found that nine out of 11 countries in the world at “extreme risk” of having a food crisis are African.